Issue 150: The Best Trade I Ever Came Across - Masters In Trading

The Best Trade I Ever Came Across

Are you curious about what the Fed is doing to your investment portfolio?

With interest rates on the rise and volatility certainly not slowing down, now is an ideal time as any to start delving into the fascinating world of bond markets. Today’s Masters in Trading Digest will provide an overview of some basic concepts and strategies to help you confidently make your first trades in the bond market. Whether you’re a beginner looking to lay a successful foundation or just looking for ways to improve your current trade strategy, this post has something for everyone and anyone who wants to learn about my favorite trade in the Futures Market.

Five Year Futures (5 YR) vs. Ultra Bond Futures (30 YR)

This is a chart of the 5 YR Futures contract overlapped with the Ultra Bond contract. In order to compare the 5 YR futures contract to 30 years of duration, we use the Ultra Bond contract.  The contract called the Bond contract only covers 20 YRS of duration and not 30 YRS like the Ultra.

November 17th: 5 YR yield trades 1.61%, while the 30 YR trades 1.57%

  • I would consider this a flat yield curve because the rates are nearly identical between 5 years and 30 years. The previous day, November 16th, saw these symbols trading at 1.48% and 1.51%. 

November 23rd: 5 YR yield trades 1.55%, while the 30 YR trades 1.43%

  • Bond yields fall sharply, but the shape of the yield curve goes very inverted. Notice how the 5 YR yield is considerably higher than the 30 YR?

December 6th:  5 YR yield trades 1.35%, while the 30 YR trades 1.21%

  • Rates go lower but the yield curve is still inverted because the 5 YR is trading higher than the longer duration 30 YR.

December 9th:  5 YR yield trades 1.45%, while the 30 YR trades 1.28%

  • Rates go higher but the shape of the yield curve remains the same.  This can be seen by the spread between the 5_30 is trading at a difference of .17. Notice on December 6th the 5_30 spread is trading .14.  The 5_30 spread has steepened by .03 over this 3-day time frame.

“I just wanted to let you know how grateful I am for your service.  I am a nurse by day. I’ve tried other, more expensive trading services and couldn’t be happier with what you are doing and offering at such an affordable price.  Thank You.” – Jeff J.

“Hey Jonathan, I really, really, really want to thank you for cajoling me into your coaching group and second for being such a patient mentor.  I have long since paid off the tuition, almost accomplished by FCX alone. Thank you many, many times over.”  Philip P.

“Hey Jonathan, I just wanted to reach out and say thank you. I have had very few losers recently.  I appreciate the discipline you guys have been teaching. You are changing my future.” Tim R.

“Before working with Masters in Trading, I was a seller of options.  But now I have seen the light! Who knew you could make money from BUYING options?  I didn’t! Thank you, Jonathan Rose.”  Sears K.

“Hey Jonathan, thank you so much for teaching me how to scalp gamma.  This is amazing how you can manage your options position.  By the way, I had never heard about this. I subscribed to a lot of different services but only yours gave me real education and helped me become a better trader.” – Jasolaw 

“Fantastic job on the Unusual Options Activity course!  I will watch it again tomorrow, and no doubt many, many times.  Best course I ever bought!” – Mike C.

“Thank you for your education and for reducing my fear of options.  I have added $41,976 to my accounts in the first 60 days.  Thank you! You are a blessing to my clients and me.”  – Georgia R.

Thank you Jonathan for your insights. Your puts on QQQ yesterday were brilliant. It’s comforting having your daily insights on the market coupled with actionable advice. – Jason

Masters in Trading Digest - Issue 150

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Jonathan Rose

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